Support The Moscow Times!

Bill Would Strip State Corporations of Profits

The State Duma will consider a bill that will require Vneshekonombank and the Deposit Insurance Agency to transfer 75 percent of their profits into the federal budget, a Duma deputy said Wednesday.

The bill would require the state corporations to transfer most of their profits from 2009, 2010 and 2011 after their head offices finish the final accounting for each year, said Konstantin Shipunov, a deputy in the United Russia party, Interfax reported.

The legislation aims to help curb the growing federal budget deficit, which reached 5.9 percent of gross domestic product in 2009. Finance Minister Alexei Kudrin said last month that 2010's deficit would stay within 7 percent.

The government has been straining to find ways to narrow the deficit: It plans to raise $2.4 billion dollars this year in a sell-off of stakes in some state-owned companies and has floated the idea of raising the gas extraction tax to prop up flagging tax revenues.

The legislation would require changes to the laws that govern the operations of the two state corporations. Currently, VEB's supervisory council and the Deposit Insurance Agency's board of directors decide what to do with their profits, and by law, VEB's profits must be invested in the bank's funds.

In a commentary on the law, deputies said "significant funds have been distributed by means of state support" and the actions undertaken by VEB, the Deposit Insurance Company and the Central Bank to support the banking system have "clearly reflected very positively on [their] profits." The deputies added that, through their subordinated loans to refinance bank debt, VEB had a profit margin of 1 percent to 7 percent.

VEB's net profits in 2009 stood at 22.8 billion rubles, while the Deposit Insurance Agency earned 14 billion rubles.

… we have a small favor to ask.

As you may have heard, The Moscow Times, an independent news source for over 30 years, has been unjustly branded as a "foreign agent" by the Russian government. This blatant attempt to silence our voice is a direct assault on the integrity of journalism and the values we hold dear.

We, the journalists of The Moscow Times, refuse to be silenced. Our commitment to providing accurate and unbiased reporting on Russia remains unshaken. But we need your help to continue our critical mission.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just 2. It's quick to set up, and you can be confident that you're making a significant impact every month by supporting open, independent journalism. Thank you.


Read more